Lowes on Tuesday beat Wall Street's quarterly profit and revenue estimates, even as the company continued to see clients take on fewer housing projects.
The home improvement chain was facing lower expectations for its fourth quarter. It had cut its full-year forecast in November after Chief Executive Marvin Ellison said the company had seen a “larger-than-expected pullback” in bigger-ticket items and discretionary housing projects.
Lowe's said it also factored in economic uncertainty in its forecast for the current fiscal year. It said it expects total sales of between $84 billion and $85 billion, which would be a drop of $86.38 billion in fiscal 2023. It anticipates comparable sales to decline between 2% and 3% in compared to the prior year, and expects earnings per share of approximately $12 to $12.30.
“Our outlook for 2024 is that we will feel this DIY [do-it-yourself project] pressure throughout the year and we are going to perform at a high level regardless of the type of macroeconomic environment we face,” Ellison said on the earnings conference call.
However, he acknowledged that demand for home improvements has been hurt by lower home sales and consumers' choices to spend more on services such as travel, concerts and restaurants rather than goods.
Here's what the company reported for the fourth quarter compared to what Wall Street expected, according to a survey of analysts by LSEG, formerly known as Refinitiv:
- Earnings per share: $1.77 vs. $1.68 expected
- Revenue: $18.60 billion vs. $18.45 billion expected
Lowe's shares rose about 3% in morning trading.
The company's net income for the three months ended February 2 was $1.02 billion, or $1.77 per share, compared with $957 million, or $1.58 per share, from the previous year. Excluding costs associated with Lowe's sale of its Canadian retail business, earnings per share were $2.28.
Sales fell from $22.45 billion in the same period a year earlier. The company said its prior-year quarter included an additional week and sales from its Canadian business.
Comparable sales fell 6.2% year over year as the home improvement retailer experienced weaker demand for DIY projects and bad weather in January. However, comparable sales for home professionals, a category that includes plumbers, electricians and contractors, were flat year-over-year in the quarter.
During the fourth quarter, Lowe's spent $404 million on share buybacks and paid $633 million in dividends.
As of Monday's close, Lowe's shares were up nearly 4% this year. That lags the S&P 500's gains of about 6% over the same period. Lowe's shares closed Monday at $231.32, bringing the company's market value to about $133 billion.
Rival House deposit It beat Wall Street's profit and revenue expectations last week, but its sales fell year over year and the retailer's leaders described the past year as one of “moderation” after unusually high demand during the pandemic. The company also said customers were continuing to postpone larger projects due to higher interest rates.
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